EGShares India Small Cap ETF (SCIN)

India investors waiting for a confirmed upturn in the economy following Narendra Modi coming to power in May, will have to wait a bit longer as the most recent data is decidedly mixed.

While inflation has slowed to 7.8% vs. the central bank's target of 8% by the start of next year (target is 6% for 2016), industrial production grew just 0.5% Y/Y in July, down sharply from June's 3.4% and May's 5%.

The most recent data show exports in August of $26.96B, up 2.35% Y/Y, and imports of $37.8B up 2%.

The Sensex dipped 0.9% last night, but remains one of the globe's biggest gainers this year. EPI+30.6%, PIN+26% YTD.

India's Sensex carved out another all-time high overnight - not surprising given the optimism for reform surrounding newly-elected PM Narendra Modi - but HSBC remains cautious. The issue, says the team, are high valuations and mutual funds very overweight India, combined with the chance of higher interest rates.

"[We] continue to believe that there is a risk of Indian rates rising, or staying higher for longer than what the market is willing to accept ... At 16.1x forward PE, the Indian market is now trading above its long-term average valuation of 15x. This makes it the second most expensive market (after the Philippines) among the Asia ex-Japan countries.”

The new Indian government led by Narendra Modi is now scheduling the start of its $10B divestment plan of state-run companies for next month. It will begin with a 5% stake in the Steel Authority of India (OTC:SAUKF), the country’s biggest steel group by volume.

Divestment of 5% stakes in Oil and Natural Gas Corporation and Coal India will raise a much larger sum around $5B.

The Indian government plans to plug the country’s budget deficit with the help of such sales.

Investor roadshows will begin in London, New York, Hong Kong and Singapore in September with the aim of raising an estimated $300M-$330M.

U.S. officials are continuing talks in India and are hoping that the new government will drop its objections for the WTO trade-facilitation deal (which must be approved by all 160 member governments to take effect) before tonight's deadline.

Newly elected Prime Minister Narendra Modi has been looking to open up India's closed economy, but states that he won't sign off on the deal unless the concerns on the restrictions of farmers subsidies and food stockpiles for the poor are addressed.

India has opposed the World Trade Organization's new global customs agreement, infuriating fellow member countries which have tried to seal India's trade facilitation deal since it was agreed to at talks in Bali last December.

Despite demanding global trade reform, India says it will veto the deal until it secures rights linked to its system of subsidizing and stockpiling crops.

WTO members state that Delhi's veto will be costly, economically and politically.

The deadline for the deal is July 31 and any suggestion to postpone it is likely to be rejected.

India's new government has pledged to bring back economic growth to 7-8% within the next three years - improving living standards and boosting job growth. Last year's economic growth was about 4.6%.

The new administration is not planning any serious overhauls or structural reforms, but rather is looking to "tinker" with existing policies by enhancing its foreign investment, reducing subsidies and improving the country's tax system.

Picking up on the India/Reagan theme, Morgan Stanley calls the recent election results there "an inflection point for India's story," and believes the country is set to move from years of stagflation to high growth and low inflation.

Economic development was Narendra Modi's message during the campaign, and Morgan believes he can deliver. One concern - that Modi's BJP does not control the upper house of Parliament - is overblown, says Morgan, and the President can call for a joint session and simple majority vote to pass legislation as necessary.

The team ups its GDP growth forecast for India to 5.4% from 5.3% this year, and to 6.5% from 6.2% in 2015.

After years of slow growth amid the Gandhi family dynasty's socialism, last week's election brings to power the reform-minded and pro-business government of Narendra Modi. Some, writes Eric Balchunas, are comparing the election to the one in the U.S. which showed Jimmy Carter the door and ushered in Ronald Reagan. What followed (after a brutal recession) was one of the greatest economic expansions in U.S. history.

Investors seem to be betting on just that, bidding up Indian shares ahead of the election, and continuing to buy since the results.

A volatile session in India saw the Sensex close up 0.9% to an all-time high following the election victory by the opposition Bharatiya Janata Party and its prime minster candidate Narendra Modi. Stocks initially rose more than 6% as results came in, but "sell the news" action took over, given the Sensex's already big run in the weeks leading up to the election.

Narendra Modi's opposition Bharatiya Janata Party is on course for India's biggest election victory in thirty years, with counting showing that the BJP and its allies are ahead in 324 out of 542 seats in the lower house of parliament, well above the 272 seats needed for a majority. The BJP might even win over half the seats on its own.

The ruling Congress Party has apparently conceded defeat and is headed for its worst loss ever, leading in just 75 seats.

Indian markets are partying at the prospect of a stable government that's perceived as business friendly and committed to economic reform. The Sensex is +4.2% and the USD-INR is -1.15% at 58.766 rupees.

India's Bharatiya Janata Party appears to have won the country's general election, with exit polls showing that the BJP and its allies have racked up anything from 249 to 340 seats in the lower house of parliament.

The ruling Congress Party may have slumped to just 97-150 seats - anything under 114 would represent its worst showing ever.

With the chamber comprising 545 seats, 273 are needed for a majority. The official results are due out on Friday.

However, it's worth noting that Indian exit polls have been notoriously inaccurate in previous elections.

Still, shares continued to rally at the prospect of a stable business-friendly government led by a party whose leader, Narendra Modi, has pledged reform to revive the country's stumbling economy.

Data highlighted how India is facing stagflationary conditions. April CPI strengthened to +8.6% on year from 8.3% in March and topped consensus of 8.5%. Industrial production fell 0.5% in March, although that was better than consensus of -1.5%.

The Sensex is +1.5%, but the rupee is weaker and the USD-INR is +0.6% to 59.866 rupees.

Indian shares and the rupee continue to rise as polling booths close in the world's largest election following weeks of voting.

Results are due on Friday, with the business-friendly Bharatiya Janata Party, led by Narendra Modi, expected to win handsomely. Shares could climb further if he gets anywhere near or above the 272 seats required for a majority in parliament.

"The markets are expecting the BJP-led alliance will get around 230-240 seats and anything above that will be a bonus," says investment officer David Pezarkar.

However, should Modi win, he will inherit a high-inflation economy suffering its worst slowdown since the 1980s, with GDP growth almost halving to under 5% over the previous two years. It has been Modi's pledges to fix the economy that have made him the frontrunner in the election.

The Sensex stock index is +1.9%, while the USD-INR is -0.2% to 59.733 rupees.

Investors are placing bets ahead of next week's election results which are expected to show a win for the opposition party's Narendra Modi and the worst-ever defeat for the ruling Congress Party amid a wave of graft scandals, rising inflation, and slowing growth.

The Sensex - up 2.9% last night - is ahead by 17% since the opposition BJP party named Modi as its PM candidate last September.

Indians have begun to vote in the world's largest election, with the electorate consisting of 815M people.

The ballot comprises nine rounds and will take five weeks, and results are due on May 16.

The favorite to win is the Bharatiya Janata Party, led by Narendra Modi. The prospect that Modi, who has business support, can form a stable coalition and revive India's moribund economy has boosted Indian markets recently.

The slowing economy, as well as high inflation and corruption scandals, has hit the popularity of the ruling Congress Party, which is led by Sonia Gandhi and her son Rahul.

The Reserve Bank of India approved the applications of infrastructure finance company IDFC and microlender Bandhan Financial Services to begin banking operations. The two were among 25 vying for licenses being offered for the first time in several years.

"RBI's approach in this round of bank licenses could well be categorized as conservative," says the central bank. "At a time when there is public concern about governance, and when it comes to licenses for entities that are intimately trusted by the Indian public, this may well be the most appropriate stance." The most recent census data in 2011 showed only 59% of Indian households had access to banking services.

A couple of current players: ICICI Bank (IBN+0.2%) and HDFC Bank (HDB+0.5%).

The EGShares India Small Cap Exchange Traded Fund (ETF) seeks investment results that generally correspond (before fees and expenses) to the price and yield performance of the Indxx India Small Cap Index. The index is a free-float market capitalization weighted stock market index comprised of a representative sample of 75 Indian companies that Indxx, LLC determines to be the representative of small market cap companies in India.
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